Scrutiny on the bounty: tax probe on global giants

The Australian Tax Office has flagged it will open 60 cases of suspected tax dodging by Australian and international companies amid global pressure to crack down on profit shifting.

The investigations will add to the 26 cases of offshore restructuring already under review by the government body.

Under scrutiny are companies that deliberately restructure to route profits through low-tax jurisdictions or tax havens to avoid paying higher taxes in Australia, often through the use of ''post box'' companies or ''marketing hubs'' that have little real substance.

''The government has given the ATO a further appropriation of money to do more about this restructuring risk,'' said deputy commissioner Mark Konza, who is heading the tax office's new taskforce into offshore tax schemes. ''We are looking at probably over the next few years doing another 60 investigations of restructuring, of which another 20 will be energy and resources.''

While mining companies are not a deliberate focus, Mr Konza said they made up a third of cases, due to their size.

''Mining has been very profitable in the last decade,'' Mr Konza said. ''They're still making good profits and, of course, the question arises, is there some way we could pay a lower portion of tax on these profits?''

Advertisement

The government's latest effort to crack down on corporate tax cheats comes as the OECD, non-government organisations and the African Development Bank call for greater transparency in multinational resources companies operating in poor countries.

There are about 240 Australian mining companies with operations in Africa. The advocacy group ActionAid claims poor countries are losing more than $130 billion in tax revenues a year by giving generous tax breaks to big companies, including some Australian miners. ''We know Australian miners are benefiting from these deals,'' said Mark Chenery, head of campaigns at ActionAid Australia.

''In most cases, these are backroom deals signed directly with politicians with little or no parliamentary scrutiny.''

A Perth-based uranium miner, Paladin Energy, has come under scrutiny for its tax arrangements in Malawi, where it runs a mine in Karonga.

A report by Norwegian Church Aid alleges there are discrepancies between Paladin's reported tax and its tax paid.

It also alleges other payments by Paladin in Malawi are lower than the company reports. A Paladin spokesman said the company was ''fully aware of the report'', and it strongly disputed all the claims made in it.

Paladin has subsidiaries registered in Mauritius and the British Virgin Islands, both tax havens. Its 2012 annual report shows the company has accumulated losses that mean it will need to make profits totalling $208 million in Australia before paying any tax.

Development groups are calling for Australia to introduce disclosure laws that would force companies to report what they pay governments in every country in which they operate. Such laws have now been passed in the US, European Union and Canada.

On Monday, the tax office launched a taskforce to investigate suspicious ownership structures of Australia's biggest companies. It said it would work closely with international partners to establish the purpose of Australian businesses in low-tax jurisdictions and issue multi-country audits.